Shawnee Motors Inc. assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

1	Sales (38,000 units)		$9,500,000.00
2	Production costs (44,000 units):
3	Direct materials	$4,400,000.00
4	Direct labor	1,760,000.00
5	Variable factory overhead	1,100,000.00
6	Fixed factory overhead	660,000.00	7,920,000.00
7	Selling and administrative expenses:
8	Variable selling and administrative expenses	$1,170,000.00
9	Fixed selling and administrative expenses	200,000.00	1,370,000.00

Required:

a.

Prepare an income statement according to the absorption costing concept.*

b.

Prepare an income statement according to the variable costing concept.*

c.

What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

* Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. Enter all amounts as positive numbers.